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Us 10, Stuart 8, U.s. 8, Karen 8, Stewart 6, China 6, Japan 5, Bob 4, United States 4, Massachusetts 4, Ron Andrews 3, Europe 3, Washington 3, Imf 3, America 2, Christine 2, C-span 2, Karen Ignagni 2, Schenectady 2, The State 1,
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  CSPAN    Tonight From Washington    News/Business. News.  

    January 28, 2013
    8:30 - 11:00pm EST  

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so right after the human genome project, we begin to understand it is difficult to change the blueprint. but what we can do is monitor these pathways because the drug companies are very adept at putting this together, as well as diagnostics. you can see what it is and you can get a drug to stop that progress. so it never creates a bad cancer protein. that is the future of where we are going to go in diagnostics. that's when diagnostics provide the real-time so you will be able to offer a job to shut down that cancer.
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.. >> host: how long can that take? >> guest: you know the regulatory system got a lot better about it because you know cancer, people don't live that long and we don't give up these great discoveries. the agency has been very open about we understand we don't have a lot of time here but if you look in the year to two years and the year for us to develop the trials and then
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another year for the fda to review it and get it really so it's not an obnoxious amount of time compared to therapeutic approval. but we do need translational medicine and regulations that allow us to take research discovery faster into the clinic for stage iii and stage iv cancers. with stage i and two we can get those treated well and monitor them. stage iii and four it's almost a hail mary at some point where we are trying to do something for that patient. >> host: is it expensive, the regulatory process? >> guest: it is expensive but it's expensive because the fda and agencies like that around the world, their job is for patient safety and so a lot of what we have to do is run a number of samples to ensure the efficacy of our test. we have to use the drug with their test and then the patient safety. so you know you are looking at
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anywhere between three and $5 million for a clinical trial and then the actual data submission and in all you can add it up to about $10 million to submit a panel for approval. >> host: ron andrews as someone who is in the medical technology field, how do we -- how do you stop the pressure on medical costs? how do you stop that process of the continual new technology that adds new costs etc.? >> guest: it's a dilemma we have and aren't a street because we all want to live longer. in fact arguably some of these discoveries will allow us to live much much longer. but the cost of that to health care and the cost to the government can become prohibitive at times. technology -- at life technology we have tried to focus their investment technology and while the technology may be expensive
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if you look holistic with the total cost to that patient, it significantly reduces the overall cost. let me tell you what i mean by that. if you have and 80,000-dollar cancer drug regimen that only works in 25% of the patients, if we run a $1000 test there will be 80% that don't receive benefit from that drug, not only do we spare the patient the side effects, we save health care tremendous amount of cost. the administration -- the obama administration if you years ago when we were in the throes of trying to figure out what we were going to do about health care, that $70 billion in 2008 was spent on oncology drugs and somewhere between 20 and 25 million had no impact on the patient. so we would have spent $3 billion on these amazing test capabilities against the 25 billion that would not respond so we really are looking at the game-changing technology to improve the overall cost of care. the beauty of these is it's
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really personalized medicine and if we can more effectively take your dna and we can identify the nuances of your specific disease to get the right treatment to you sooner, we don't practice medicine that is practiced in the community today and you can analyze the health care community. it's hundreds of billions of dollars wasted on trial and error medicine and a more specific approaches treating disease at the individual level and will save us a tremendous amount of money. >> host: ron andrews of life technologies, do you work with the nih and you take grants from them? how did they do technology? >> guest: we are one of the largest supporters of the nih and they use our technology. it's used all over the am i h. system. frances collins who is the head of the nih is very fond of -- he is up there talking about how
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health care is going to be changed so if we have a great relationship with the nih and they grant money out to researchers and of course we apply those researchers to technology so they can do advanced research. >> host: ron andrews is the president of medical sciences provided technology. we are here at ces international in las vegas. thank you for your time. >> guest: thank you, peter. >> host: are programming from ces international show 2013 in las vegas continues next week. this is "the communicators" on c-span.
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two members of congress are joining us on "washington journal".
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next a discussion on stabilizing health care costs and improving health outcomes. we will hear from health care practitioners and insurers. this one hour and 40 minute event is hosted by the alliance for health reform. [inaudible conversations] >> okay, can we have order here? hi. i'm at howard with the alliance for health reform. i want to welcome you on behalf of senator blonde, senator rockefeller our board of directors. this program is to examine how we ought to try to stabilize health care spending in the united states. we all know that health care is
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now a huge part of our economy, accounting for almost 18% of gdp. that's $2.000000000000 for those who don't know the exact size of the gdp. that was from 2011 and i'm sure the health policy students somewhere play a drinking game while watching programs like this on c-span based on how many times the word unsustainable is repeated. those same 2011 spending figures released earlier this month revealed that for the third year in a row, aggregate spending grew by just 3.9%, the smallest increment in decades. so, to paraphrase ross perot's running mate in a debate many years ago, why are we here? and at least one response to that question is, we don't know
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if the health care cost dragon has dragon has been slain norris just hibernating. how much of the slow increase in cost comes from the sluggish economic recovery, more people without insurance, people postponing care over which they have any kind of discussion at all, and what about the explosion in chronic conditions continuing to develop in a more sophisticated and more expensive treatments and tests and for the most expensive health program, medicare, there are in fact 10,000 baby boomers joining me in the over 65 set every day. so despite the relatively encouraging numbers from hhs about 2011, there is still a lot about this issue to be discussed and analyzed and here we are with what i think is going to be a very good program on that topic. we are very pleased to have as our partner in today's program the commonwealth fund, which is
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a century old philanthropy setup to set up to promote the common wheel, the common good and we are we are especially pleased to have as their cold moderator today the newly installed president of the commonwealth fund, doctors david blumenthal. i'm not going to get david a formal introduction but i come into to read your biographical biographical -- in your -- i will mention a missed all of his analytical expertise he is also a primary care physician. so he has a view from many different parts of this health care system. david welcome to not by any means your first alliance health breathing but your first as head of the commonwealth and we are very pleased to have you here. >> thank you very much, ed. i appreciate the alliance's work on this raising and many others that we have done with the
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alliance. i also am very grateful to our two guests, bob galvin and karen ignagni who will be joining us for this event and to my left stu guterman but i'm sure that other introductions will be made i am just going to try try to set a little bit of context for this discussion. it is of course without stabilizing health care spending and the commonwealth fund commission on a high performance health system which produced a report called confronting costs, which stewart will describe to you in more detail. it was driven by the fundamental philosophy of that great philosopher yogi berra, who noticed that when you get to a fork in the road you should take it. and we truly are right now in the commission's view at a fork
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in the road. we are confronting very very difficult human and political choices with respect to public and private programs. and how to continue to ensure america's population. the choice on the one hand is to cut payments, reduce benefits for covered beneficiaries, restrict eligibility, a whole series of things that are very hard for public policymakers and elected officials to do and which fundamentally take things away. it is the r in every word but in name. the other route, which is less discussed, harder to quantify but in the view of the commission holds much more
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promise for the future of our health care system is to reengineer health care to get more value out of the money that we spend. regardless of which route we take or which combination of routes we take, we believe that reengineering process has to go forward to mitigate the pain of the cuts that are coming, to minimize, to avoid as many such cuts as possible and we also believe that the opportunity is huge, huge to make the health care system work better, huge to make markets work better. so, we also took the perspective that this is not just a medicare and medicaid and public sector problem, that the cost of care for all even more on businesses, individuals, states and
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localities than they do on the federal government so, though we are having this discussion todaf the congress, that does not mean that our focus has been exclusively on the programs that are under the control of the congress do we do believe the federal government can influence the private and public sector spending so you will see from this slide, looking out to 23, the federal government will be covering figure 2% of the total cost of health care, where is private employers will be covering still a comparable amount and households also ,-com,-com ma more than a quarter of the cost. so the choices that we face ball not just to the federal government but also to other stakeholders in the system. and then it's also clear that we need to engage consumers, not
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just consumers of public programs that consumers of private programs as well in the effort to contain and make staple the cost of our health care system. it's always worthwhile reminding ourselves that 5% of our population accounts for 65% of the cost of health care and that population more than any other needs assistance with better information, failure related choices and an opportunity to control their destiny in the health care area. we cannot move forward effectively without empowering them and making the system work better for them. the panelists that you will be hearing from, stewart said the vice president and executive director of the commonwealth fund commission on high performance health systems, it karen ignagni president and chief executive officer of america's health insurance plans and bob subfive, chief executive officer for equity health care
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from the blackstone group. thanks for your attention. we hope you will find this worthwhile and i think our first presentation will be from stewart. >> stuart, if i could just handle a little housekeeping before you start. you know you have information your packets including not only copies of the slides that we have available beforehand but also materials that i hope you will find useful in background. there is also an additional sheet that lists at lunch of other materials that we save trees by not reprinting. if you go to our web site at at all health.org you can find links to all of those documents, and we commend them to you. if you you're watching on c-span right now, and have access to a
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computer, you can follow along with the powerpoint slides on our web site, all health.org. just click on the item about today's briefing. there will be a webcast available tomorrow probably followed by a transcript of today's discussion in a few days. also on our web site and i would urge you with the appropriate time to fill out both the green question card which you will find and/or -- forget the or, and before you leave we would very much appreciate you filling out an evaluation form that you will find, the blue one, so we can improve these briefings and be of even more value to you. as david said we have three terrific panelist today. i should have mentioned in introducing david that in the past several years, in addition to his other duties, he chaired
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and continues to chair i think the commonwealth commission on high performance health system which produced and improve the report that stuart is going to talk about and stuart is the executive director of. so mr. galvin go right ahead. >> thanks, ed and thanks david. the commission on high performance health system has produced this report on confronting cost to try to address the problems that david described. and, as david said the underlying principle here is that it's a health system problem, health spending is something that puts pressure across-the-board on federal, state local governments and also businesses and workers and their families and the problems that health spending causes need to be addressed systemwide as well
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because they reside systemwide. pushing down on one part of the system to his address this problem won't do away with those problems even if it does solve some of the apparent symptoms. the first thing that the commission said needs to be done is that we need to set a total health spending target to gdp growth. the figures are well-known and the united states has spent much more money on health care than any other country in the world and the commission felt that holding health gdp growth ought to be a legitimate target nationwide, not just the federal government. and it also, they viewed this as a motivating force similar to
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the action taken by the massachusetts state legislature which set a target for state health spending. they felt that this would drive action to take and implement policies that are effectively controlling health spending but they didn't mean this as a -- that is if you don't fit we will chop off your feet to get there. they mean to propose a set of policies that they feel are going to be effective at addressing rising health spending and if that target is not met by implementing those policies than those policies ought to be accelerated further. there are three pillars that they are recommending, a three-pronged approach to addressing health spending growth. one is provided payment reform, and that means to move toward better payment that pays for what we want to see the health
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care system produce rather than increasing volume and increasing intensity without necessarily concomitant and if it's two patients. the second prong, the second pillar is to provide and support high-value choices by consumers and as david said that means not just to increase the skin in the game but to provide better choices that consumers can make them provide them with the information to make those choices and reward them for make in those choices. and then the third pillar is to make markets work better so that regardless of what approach you take that the incentives that are embedded in the system will work better and be more effective at producing the results that we want, which are essentially summarized in the tripling better health, better care and lower costs. the commission developed a set
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of illustrated policies that we feel have the potential to say $2 trillion. the potential effect of these policies was the result that we got. and the impact of these three sets of policies is portrayed here on this slide and you can see that two-thirds of the $2 trillion worth of of the potential savings are in provider payment reforms that make sense because the key here is to provide better incentives, better rewards for the health care delivery system to produce the kind of care that and it fits its patience in a more efficient and effective way. the increases in information and better choices for consumers was
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estimated to produce about $190 billion in savings over the tenure period from 2013 to 20203. and a couple of the policies -- i want to mention a couple of policies that are embedded in some of these pillars. among provider payment reform we are talking about accelerating bundled payments for a two-tier episode, to force the issue on providers getting away from thinking about reviving services to the patient in front of them but rather thinking more broadly about how the patient can be treated and the bundle of services provided to those patients. we are talking about strengthening primary care and support care for high complex patients because that is where the money is and that is what's illustrated in the slide that david presented. but it's also where most of the
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benefits can be because these folks who have multiple chronic conditions are folks who are in dire need of more cori need the care. by their policies to expand and encourage choice by consumers, we are really talking about restructuring the medicare benefit package that we referred to as the medicare essential that will provide integrated in effect across what is currently split out into part a, part b, separate part d private plans in the medigap policy or supplemental policies that most medicare beneficiaries are in traditional medicare and to provide incentives for the use of high-value care and care systems to provide better -- i enhancing pentacle information available on outcomes patient experiences and accelerated
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meaningful use of health technology. so that is necessary even though it accounts for a relatively small proportion of totals savings estimated. it's necessary to make the system work better. as pointed out you need to engage consumers but engage them with positive incentives. there have been some interest in the medicare essential option and we are in the process of trying to get that paper published. we are currently reviewing and will hopefully have that paper published before long and will talk to folks about that. about that proposal. under making markets work bettet simplifying and unifying administrative policy so that you have reduced administratively in our health care system. health care system. we are talking about malpractice
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reform that focuses on the adoption of best practices and rewards physicians and other practitioners by adopting best practices and hopefully that will increase not only increase patient safety but also reduce malpractice claims. and malpractice premiums that many doctors find so burdensome. the $2 trillion inessential savings over a 10 year period also fall across each of the different major specters of the health system. the federal government, we estimate will save about $1 trillion with that over a 10 year period because health care costs will grow more slowly because they will be better integrated, better informed and because there'll be incentives in place that don't provide
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providers with better care but rewards them with providing better care instead of punishing them for doing many of the things that benefit their patients at the current system does. state and local governments will benefit but the savings in the medicaid program also because state and local governments or large employers in their areas. and private employers will benefit again because they will have better health care systems to provide their employees in the health care costs will grow more slowly and of course households would be a major beneficiary to the tune of about $500 billion in direct savings. but of course households in the end pay the taxes that support government expenditures. they pay premiums through their employers for health coverage. day four wage increases that could be much higher than health
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costs were they growing as fast so they really capture the whole $2 trillion in the end. we are not talking about -- i hear a lot of talk about if there is really health reform and people fighting for over a dwindling and shrinking tide. i would posit that only in health care with a growth from $2.9 trillion in 2013, to $25.1 trillion in 2003 would be referred to as a shrinking tide. it would be flowing if nothing was done. so, we are talking now, to give you some sense of how -- the magnitude of this -- we are talking about health spending under current policy,
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totaling $42 trillion over the next 10 years. so if you save $2 trillion ,-com,-com ma you would be reducing health spending to only $40 trillion over the next 10 years. you would be cutting the growth in health spending from an estimated 90% under current policy to only 75% over the next 10 years. so we have to keep that in mind and to keep the perspective that we have a lot of resources and the health care system even under the best of circumstances. the idea is to use these resources more effectively to benefit people. now we have a set of policies that has the potential to bend the cost curve, but the easy part is to identify the policies and the hard part is to get them passed, enacted and implemented effectively and today that to do that we need a set of actions. we need to be building on current momentum and public and private sector programs.
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we have a lot of examples of real action taking place now among providers, among purchaser groups pushing for action and we can build on that and accelerate that, so this is not a fantasy that we are talking about here. we are talking about accelerating actual things that are going going on. we need to use federal policy to accelerate and promote that acceleration and to promote bottom-up innovation. we need more collaboration with states, private payers and consumer groups, all of the parties involved in this to push toward system improvements and the need to look at the vehicle being put in place in the beginning of 2014 to the health insurance marketplaces and see how they can serve as a vehicle for promoting alignment across public sectors. i want to thank my politics --
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colleagues that put together the questions. >> thank you very much stuart. >> thank you. good afternoon. i want to say we are very very happy to participate in this important discussion. i am long-standing fans of the lines in the leadership and we think the commonwealth fund under david's leadership has now put something on the policy table that will reignite the discussion about costs and we appreciate being here and talking about that. i try to think in light of what stuart was going to do and what you may be thinking either hearing your perspective on capitol hill or the stakeholder community and thinking what bob would talk about. it struck me how to be most helpful to you would need to talk about two things. one is a strategy that we might he thinking about systematically
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to address health care costs before we turn to specifics and then turning to specifics, how do we think about the policy agenda. stuart said this and want to commend behind him that not just the agenda at the federal level. off in washington we primary talk about that at also at the state level in the private sector and how you align all the different strategies. that is what i would like to take in the next few minutes to kick off the discussion. strategic you think there are five things we want to think about. david began this way as well. first widened the lens. when you to begin to talk broadly in the policy community about total cost containment as opposed to a silo by salo approach. the silo by silo approach whether it's focusing on medicare are focusing on medicaid public programs leads to cost-shifting to the private sector. that leads to the public sector to broader and higher tax expenditures, higher spending so from that perspective of the
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government that is bad because we have to bring all of that under control but from the commercial perspective individuals purchasing on their own and businesses wanting to stay and continue to offer coverage to their employees, it that's bad from that perspective. we have to have broad discussion about total cost. second, don't reinvent the wheel there are some very significant developments down going on in the private sector that we think can be actually done synchronously with public sector initiatives that we can actually move the needle much faster and having discussions about exactly how to capture that and what to do is very important. so not reinventing the wheel. three, think we need to broaden the discussion. not only the total cost to think about how you achieve an agenda where the federal policy agenda,
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state policy agenda in the private sector initiatives are aligned. what will move the needle? what will provide incentives to move in the direction of cost reduction. and i want to talk about it couple of ways to do that but that is the policy question, how to align these different strategies and how to think broadly about all of them at the same time. i think we need to clear the barriers that are standing in the way. i know bob is going to talk about consolidation and is part of an import organization that has done a significant amount of work. in the commercial area for private purchasers and individuals purchasing on their own, in the private sector we are doing tearing. tearing meaning how do you identify for patients? where the high-performing networks, physicians and hospitals? we are partnering with physicians and hospitals to do that and with significant
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results to report. in medicare advantage for example which is the private sector part of medicare we have huge tearing. that is when strategy in achieving the kinds of things we are doing in the commercial arena that could be thought about and i'm going to talk about a couple more. finally i think we need to think about the issue of affordability very broadly. one issue we have been talking about here on capitol hill for all of you that are here is there are provisions in the aca in the premium packs that ad to costs that will put pressure on individual and small businesses not to purchase. we need to get people into the pool to make it work for everyone as demonstrated by the example of the state level. so that is an example of that. now mouthing to the policy agenda. their seven things i want to talk about quickly. first, overhauling the payment
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system. this is going on in a very comprehensive way. there's not one-size-fits-all with respect to how it's being done. depends on the community and the readiness of physicians and hospitals to accept risks and accept payments but we are talking about classical homes. we are talking about bundling. we are talking about global negotiations in terms of moving from the retrospect that great of payment systems to a global approach and to emphasize not only that -- and stuart said this effectively a thought to emphasize not only the cost reduction part of that but how you align quality improvement incentive to achieve both goals while improving cost reduction. second, talking about the total costs are not a silo by silo approach to make sure that we are not designing strategies
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that yield reductions on one side that create cost-shifting on another. that needs to be look at and i thought the commonwealth fund did an excellent job talking about how we have to look across-the-board at all of this and what happens in the end with the strategies. three, aligning incentives. this will strike a number of u.s. being rather a boring part of what otherwise is a stimulating discussion but i want to take a crack at talking about why i think it's important. we have over five measures out there. we need to shrink the numbers of measures to get consensus on the high-value and have a synchronistic approach from the public to the private sector so we can row the boat in the same way. it may strike u.s. less than challenging shall we say, but sometimes smaller things can be the things that we can point to that could really move the
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needle and we can talk more about that in discussion. the next prohibitive barrier and they gave you a couple of examples when i began but i want to talk about a couple more. there are various markets today to share information. in some cases health plans are forced to sign contracts with providers where they can't share information. the whole delivery system aarp aarp -- he offering challenges to provide dashboards for physicians for hospitals and patients so to the extent we can't share information, those barriers should be broken and he wrote it. next, i think any challenge legislatively to inhibit the ability to form high-performance networks, that ought to be also discarded because again it's standing in the way of moving the kinds of payment changes
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that i think stuart talked about very effectively. wellness incentives. we are working partnering with employers to encourage participation in wellness programs and rewarding people for doing so that we are not able to do that on the individual side and with so many people purchasing on their own, that is something that ought to be looked at. there's going to be a demonstration in 10 states for the individual market but we have to think more rightly about how to encourage individuals to participate in the management and get rewarded for health risk appraisals and following the specific guidelines of their physicians. i want to also point to out-of-network charges. there hasn't been enough focus on out-of-network charges and what that means to an individual. we talk about government payments and we talk about government costs, purchasers and it employer cost but to individuals if they are seeking care out of network it matters to them if a particular
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physician is charging 10 times medicare, five times medicare, seven times medicare. we are just finishing up the study and the results are eye-popping in terms of out-of-network charges so we have to look at that. stuart talked about malpractice. if we want a high-performance system that to protect physicians who are practicing best practice and surely that is something stakeholders can agree with. i want to just say two more things. 21st century workforce. we have talked about the scope and practice from the standpoint generally in the policy community about nurses working to the top of their license. i would say it's important to look at the practice breaking down barriers so physicians can practice to the top of their licensing getting as much help as possible implementing coordinated care and disease management which we need to move to. finally, i think there are real opportunities if we take the commonwealth fund notion of taking $2 trillion out and we look at where is the best area
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and what is the best way to do that? we think that there is some real potential with respect to states and state leadership bringing people together to in the state colder community to develop strategies to become less dependent for dual eligibles and nursing homes, achieving care more affordable a a and more effectively in the community, to deal with variations in practice at the local level and often you see variation not across states but within states. we talked about consolidation but also building and construction we see a very significant increase in building and construction these days which is creating overhead demand for hospitals that are going to be very very hard to satisfy as we deal with the payment models. so those are a couple of examples of where we think we can start. the opportunity to reward states for actually achieving reductions in the cost curve and
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at least given the projections of cdo about where we are going to the extent it could be reductions that are identified in a game sharing way that could achieve some real progress in terms of moving us forward. so the final thing i just want to note for those of you who are techies and interested, we put 50 years of government data in an ipad app. it's free for the public so here's the site where you can find it and hopefully it will be helpful in identifying ways to achieve cost but also places to go where stakeholders can work effectively together to achieve this important objective. thank you. >> thanks, karen. thanks lobs galvin. >> good morning and thank you very much for asking me to speak. i thought it was a great report
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or go stuart and i on the commission for several years and it's really always worth reading because i think it puts an aspirational view and i think it's great. i think that's nice work. today i'm going to speak on the part of employers. it's probably part of the sector you hear from the least so i will make some of the comments general at the beginning talking about what we are doing and what we are thinking about cost and then i'm going to spend the last cup of minutes talking about the challenge was we are facing right thing for public and private sectors working together and where will be necessary to make a difference. just to bring it home t. to you what employers do, you think you know they're about 3 million employers that cover benefits for 150 million americans. for the city working in government people inside companies that do this are like -- going for those of you who are in outside companies you know what it's like to have your benefits given to you by a company. it's a balance between trying to stay profitable so that you can
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make profits whether it is for the owners of the company, their shareholders and to hire new employees in keeping very good employees in your workforce. it's always a balance between those two. that is what drives employers to do most of what they do. it isn't just cost i will show you. at the necessity to get -- with employees. with that i'm going to talk about where we are going so could i have the first slide? so, although i'm not going to talk about coverage today, and going to talk about cost i wanted to show this lie because when you talk to any player today the affordable care act has gotten their attention. does change the structure of the system meaning there are going to be options for small employers and large employers in 2017 and options other than
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covering are not covering. and although i'm not going to talk about what percentage are going to go or not feel i'm happy to do that in the q&a. i think what is important is the common denominator no matter which way an employer goes is still going to be cost. whether you are still funding it as a sponsor and you are paying first dollar or getting a voucher to your employees, inflation is inflation and as long as you need talented employees and health benefits are more and more affordable health benefits are more and more important to employees of all kinds, then vouchers or defined contributions can inflate the same way as the primary dollar. i think employers are going to stay interested in cost and as you can see it's an unsustainable system. so what are employers doing about cost cuts that put out this equation because it really does explain at the highest level kind of what employees are
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doing. this is almost a decade and a half old. several of this put these together back and around the year 2000 after the managed care experiment of the nineties did not work out so well for his in terms of containing costs and making happy employees though so it really is the way to cost control is through value enhancement. it is no longer hasn't been for a long, cost-cutting approach. costs have to be integrated with quality and we define quality as clinical quality and patient experience of care. as an aside what is interesting to me about the private sector and the public sector with whom i work closely is i think we both ended up in this equation coming in different ways. 15 or 20 years ago the private sector -- i think the public
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sector particularly medicare was focused on having to regulate system and letting the delivery system work on its own and they realize that didn't work so we are all valued purchasers now and i think this equation makes a good point that how we seek that. in the private sector side we believe that they way to value it is to apply in a thoughtful way market forces to health care and what do we mean by market forces? they are the five forces, competition, choice, information, incentives and accountability. we believe we need need to do that for getting employees engaged in a way that they haven't been before. i think we see going on in the private sector employers today and you will see it in exchanges is a growth the high deductible plans with or without savings accounts to make employees and their families price sensitive to what's going on and then i think you will see more and more of this thing called value-based insurance which again, a stone
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value, means employees will pay differentially based on the value of the services that they get are based on their own participation in the system. an example of that is waiving co-pays for diabetics who take their medications. so those have a lot of momentum and i think you will see a lot and some of them are controversial. again i'm not going to take that on today because i want to get to two points which is employers are also very interested in the delivery system. what i have talked about so far as the employer benefit design by the employee. high deductible plans in value-based insurance but we obviously understand that no one is ever going to be healthy enough to not need to go to the doctors hospitals and drugstore so what happens in the delivery system is important. the same principles apply about those market forces. so there's a big move to show the kind of crisis that you see which happens to be in schenectady that actually was derived believe it or not by a
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group calling doctors offices and calling different kind of providers of the services to see this gigantic variation in price for something as simple as a sore throat. i showed this because we know that we are not going to say the health care system by having people shop for sir throats. i show this because nobody had any idea that this existed. in this bath the chart came about because we put and a plan when i was in general electric and a very upset engineer from schenectady called me. and he said i might or might not like this high deductible plan but you cannot put one of the sin and not show this kind of price difference. i have the need to know. he said i couldn't find it from your team. i had to call all of the doctors offices and hospitals to find out the price. there is issue number one that i think the sectors need to work together and cooperate because this is going to happen in exchanges. obviously less of an issue in medicare because of the
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administrative pricing that once you get into the exchanges you are going to want to know these prices. it's very difficult information. there are still gag clauses that providers have. is difficult for the ride that sector to put this together and you see a lot of innovation going on in the private sector on companies that are trying to get this kind of price information to employees who are simply accessing data. let me hasten to add that i think of plan sponsors on the private sector side had an agreement that we are we are not going to show price data. if you're going to fall you that value equation you can't show one without the other. so integrating those datasets means to have access to both of them and we are really struggling and i think you'll be struggling too to the extent you have anything to do with regulating or setting rules particularly with the federal exchange. the other in last issue i bring about is what is beginning to
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seem like an unintended consequence of the payment reform that we on the employer side and everyone has really supported and that's the idea of moving towards a more coordinated payment, more global payment and more bundled payment. and so i think all of that is great and that move from fee-for-service makes a lot of sense but if you follow the logic to do that you need to have providers. you need to have more organizations among people that deliver care. again a good thing. to bring that together brings about coordination and kind of appropriate consolidation in every industry whose growth is slowing and the stewards that have to consolidate. where appropriate consolidation becomes too much consolidation it becomes a problem because what happens is you now have organizations that can become so big that two things happen that we really don't want. one is that they have tremendous
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pricing power and the pricing power will be the cost-shifting because medicare will set its rates and then to the extent that the organized system does well or doesn't do well particularly the latter they will then have market power to potentially shift cost to the private sector. the other bad things that happens is that innovation starts to get squeezed. as a sponsor in the job i do now i buy health care from 40 different companies and there is no day that goes by and i have had to already that an innovator doesn't come up to me with an odd line way that they have applied cdc principles to treat diabetics on line. on friday, there was a very interesting company that was going to send health coaches out to decrease readmission on the commercial side. so all of this innovation needs an audience and part of the worry when you get organizations that are that large is that it's just hard to be heard.
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so i set this chart is because that doesn't have to happen. i set this up because this is kind of a different -- this is another fork in the road and david showed you another thing that i think is happening all over the country which is when providers come together, very good things can happen and there are tremendous examples of great care and lower prices but at the same time that the potential is there, or the other side of the stage which is outcomes that maybe aren't any better but certainly the ability to get more price and cost-shifting. so the question is what do we all do about it and this is my final slide. that is where karen mentioned briefly this organization that was founded on among employers that is called capitalized payment reform the initial being cpr meaning this is an emergency, to try to rationalize what am players do with payment reform. one of the issues we are trying to address is this issue of
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turning kind of this very good group of payment into having a positive outcome for patients and affordability and not the other side. so i think we need to measure it because we really have no idea what's going on. i can tell you the evidence is growing that the web site s. payment reform.org, the evidence in this paper is that more and more markets across the country private sector plans and employers are looking at that very high price increases year-to-year in some of the same markets that have the acos that have qualified for medicare status. so what can we do about it? again it's to measure it and there is no kind of hunting and no neutral party that is today authorized to measure what is actually going on. i think we actually need to make sure the antitrust is properly funded because i know they really get it at doj and are on
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this as well. and then i think we need to make sure, and it goes back to my final comment, david and stuart and karen said which it is it has to be a whole system solution. it can't be the one sector does better and the other does worse. the real improvement is going to come when health care is more affordable and better quality. thank you. >> terrific. thanks, bob and we now get to the part of the program where you get to quiz the experts. you can fill out a green question card and hold it up and someone will bring it forward. we will get to as many of those as we possibly can. there are also microphones on either side of the room, where you can go and ask your question yourself. if you do that, please identify yourself and be as reef and stating your question as you possibly can.
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you beat me to it. go ahead. >> thank you. we know that there are some examples of well-integrated systems that deliver quality care and generally a comparable or lower price system than other situations. i'm curious because over the past three years where there has been this period of relative stability in prices, how does well-integrated systems have performed as compared with other parts of the system. has anyone looked at that to see if there are any differences? >> stu, take the firstcrat?
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>> the bottom-line answer is we haven't done that study. i don't know, bob if you know but that is certainly worth looking at. i think there's evidence that some of these systems are doing very well. certainly there is evidence that they are achieving lower-cost growth through their efforts. >> so i don't know of a system but i think it's a great question first of of all. of all. i don't know for systematic study but i can tell you about our database. it's a couple billion dollars of spending but enough that you can make conclusions. after the last couple of years of these kind of less high than normal increases, what we have seen is a staple utilization --
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actually some slight increases in quality and all of the increase driven by prices. when we look to see what is driving the increase in price, it seems to the hospital and particularly outpatient hospitals, especially drugs as a secondary one and when we look into the markets where that happens that happened to be the markets that have the most consolidation. the extent you are asking which i haven't got your question is how are the truly integrated systems doing versus the others and again the data we have on that, which is probably not enough volume to have a cost interval is they contend to outperform by a couple of points >> the only other thing that i would say to this important question is that i am announcing data in the process of being developed for publication that show a real moving of the needle in terms of moving to these
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different payment strategies, and taking physicians that are primary care physicians for example in individual practices, one physician, to physicians, connecting them virtually with coordinated care and actually seeing significant results both on the price side as well as on the quality side and seeing data in important areas across the country on a real reduction, a real reduction as opposed to something less than that. ..
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how it's happening area by area. >> let me just correct the response. i misunderstood your question. there's plenty of evidence of examples of integrated sthams are addressing cost growth and being successful at doing that and improving the quality of care they're providing as well. and those around the country and they're in different circumstances and you'll find case studies of a lot of those on the common wealth fund website. and even at that, so you to realize that many of these systems are operating in a context of a health system that
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punishing them frequently for doing the right thing. so, you know, we can have much more of that kind of success if we could address the underlying health system incentive that are running counter in doing these kinds of things. a lot of people in the forefront of the moving are bucking the current system, actually, to be able to do the kinds of things for the good of their patients. >> i think actually you were there first. go ahead. >> okay. i'm jo ann lynn, the director of the center for elder care and advanced illness. what you proposed in the report is really exciting and certainly should be followed up on. i wonder, though, if we aren't still sort of missing the obvious. for most of us in the room our biggest expense is going to be
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in the last two years of our live living with a disease. probably almost half of our lifetime expenses, and we're holding that piece of time to the same quality measures and assuming it's part of the same market as the rest of health care. and it seems that it shouldn't be, it's really disting at least in peed yatdic. we think of nothing them being a different care system. old, frail, doesn't just need a medical care team or medical home. we need long-term services and support and honest discussion about decline and death. and we seem to still be dancing our way around both of the issues. what do you think about the possibility of really creating a marketplace that values the innovation and tries to put forth a different product that couldn't stand the fragmentation we have. we would see that period as
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being distinct an requiring a different service array. we would require care plans for each person, we would manage that system in the production aspect, and in its payment aspect because of the overwhelmingly public or private on the way to becoming public how many people have the resources to endure ten years of long-term care. all of us are in taping. so it seems that a is where the money is, and yet we're continued to put forward the care system that was designed around 50-year-olds for that part of our lives. and doesn't fit and it costas lot. you know, we spend more on medical care than long-term services and support. every other developed country spends twice as much on long-term services than medical care. we medicalize housing. my medical school didn't teach me anything about houses and i
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arbitrate whether people go to nursing homes. i think there's another frontier that isn't quite yet on the table. how can we get it there? >> i think you're right. i think every parent should have a care plan under 65, over 65, or in the frail elderly population. i think you're absolutely right about what that does in terms of helping that supporting that patient achieve the expectations that they deserve and they seek. i think that one of the things is i can report from the health plan perspective as we meet the needs of the medicated populations we are focuses things on long-term services and support and partnering withed a vote casey and look at housing, look the pathway to move people out of the nursing home back to their homes and community where they can be supported there.
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so i think you put on the table a very, very important issue and i know that not to add suggest additional programs, i think this is an area that we really need to pay attention to. but the concept of coordination of care is very, very important. we pioneered hospice in the health plan commune toy make sure that people could die with dignity and support and with the families next to them. i think we can take that concept and extend it broadly. i think it's going to take a lot of discussion among the entire stakeholder community and patient community, but? -- but there 0 opportunities to elevate the level of care for these individuals and do in the right way that each of us would want for ourselves or for our families. i appreciate you raising those issues and they are important. >> and i think it's a good program suggestion. and one that we actually are
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hoping to be able to move forward too. we have a food of green cards. if we're going try to integrate, if you will, questions from those cards with folks at the microphone, and if i can ask you to fore bear a little bit, dr. bloomen that has a couple of questions lined up from the audience card writers. >> there are tons of great questions. apologies to those who have may not get their answer inserted. the first one is why haven't you pursued market-based reform that are bottom up such as patienter cluster or establishing hsa for medicare patients? >> actually, i have one from this stack of scardz that addresses a question to stu saying quoting the report as say we should use federal policy to accelerate bottom up
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unelevation. what specifically can the feds do? >> well, in answer to the first question, i think the commission report embeds in it an awareness of the importance of market force. but the commission in the policies are proposing lead toward positive incentive, that include, you know, rewarding patients for seeking care from high performing health systems. rewarding them from seeking coverage from plans that are high performing. and introducing market accountability in a more positive way. what the commission less comfortable with is, you know, the pure skin in the game approach that penalizes folks for not being better shoppers in a circumstance where therefore
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frequently they can't be better shoppers. that's one. and in terms of the kinds of policies that we could see having in the medicare essential plan that is briefly described in the report, and i mentioned we would have a reward for medicare beneficiary who agree to designate a primary care provider, and agree to get their services from a high purchasing health system like aco or other similar model. they would reap the benefit of that by sharing in the savings that are obtained for the program and for the system from getting better care at lower coasts. that's the kind of thing that medicare policy could certainly encourage. >> as sthiew stu was talking i think there might be a middle
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ground talk about and think about in medicare in particular the kinds of things that bob talked about in the private sector and employers and health plans are working on together and the concept of value-based benefit to reward individuals for getting their participating in a care plan, having a care plan, following it, participating in disease management, i think that is why i want to use the example of tiering. that's the kind of thing we're doing and the commercial side that i think could be a middle ground that could be brought to the medicare, certainly medicare advantage where you have a plan to encourage people to choose high performing networks and so on. so this concept of value based benefit, i think it could be begin to look at productively from a patient friendly pro patient point of view, which is to support the kinds of high quality choices that all of us
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want to make. >> yes, mike? >> mike miller physician in health policy communication consult assistant and stewart, new the report which is great, by the way. you summarize how you set spending target and that is the approach that massachusetts is recently taking in the legislation in the lot of control the growth and health spending. but, you know, a lot of what we're hearing at the federal level isn't spending target. it's savings target, kind of the flip. and given that, you know, the projection on actual spending versus what the projections are tend to be different. i think we have seen in the last few years that actual spending has been less than than projected. can you talk about the pros and cons of those two different approaches or ramifications of setting spending targets versus setting savings target. particularly multiyear? thank you. >> sure.
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you're right, if you, you know, how spending is going to grow with certainty. they are the same thing. but i think the emphasis needs to be on what we think a reasonable a. resources are to devote to the health system, and figuring how most importantly to best allocate the resources. which is why i think the mission focused on a spending target spending growth target rather than a savings target. the idea not to emphasize taking resources out of the system. the idea is to emphasize putting the resources that are in to the system in a way that is most effective for the patients and for everyone else involved this system. so that's a matter of emphasis. >> two questions. i want to hit here that touch on the same issue, which is administrative costs. which have come up. one questioner points out that
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our mrlgtive costs in the u.s. have found to be as much as six times higher from the average of other countries. and the question is, first how can they be lower outside of a medicare for all system where a tightly regulated public-private system in germany. and second, what are the current barriers to uniform claims forms and certifications processes and other things that could significantly lower the administrative costs? >> now >> please. karen. >> just to start off. i suspect everybody wants to comment. i think it's a good question. first, the aligning point where making sure that we're having -- and the significant amount of this going on now. in the private and public sector to reach an agreement on the high measures. you can't achieve something you don't measure.
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what are the priorities, how do we shrink variation where do we put our emphasis. so we can have everyone rouge the boat. it may seem small. it can having a meaningful difference. aligning and credentialing in the private sector we have created organizations aqh to sink nice redecialing so physicians dealing with anyone of our health plans would have the same credentialing process. we think there are opportunities for the public sector align with that. that's the second thing. we think it could work out quickly and well for physicians. the yield higher satisfaction and achieving the kind of quality performance we want. third, i think there needs to be -- and david you mentioned this i think in some of the opening comments. there needs to be a stepping back as we think about infrastructure. to think about how does icd how
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meaningful use and administrative simplification go together. what are we trying to achieve? where do the incentive fight one another. what is the best way to actually improve performance and where, again, should we put our emphasis both public and private. the conversations are beginning in the publicker is or it and d deash sector and private sector. we need think about how do they alive so that we can make sure we're achieving effectivenesses and e fresh sei. so those are just a couple of things to start off the conversation. i'm sure everyone wants to talk about this. >> i would -- i think it's a great question and we on the employer side several years ago try to make a run at it. it was difficult to sustain. it was impressive obviously for easy to do would have been done. it was a classic problem we could not quite figure get the
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group together that could make a difference even on the private sector side. david, i don't know if you are going head this. i would love to see -- so you been so involved in i. t. in the former role. we were hoping it would be a way to get at it. >> so i do think that better information and exchange information will reduce costs. but i think that the actual administrative cost that are associated mostly with claims processing, billing and the management of the provider payer inner face will not be solved by electronic health records. there is a provision in the affordable care act, i have no idea what happened to it. to encourage uniform billing and claims processing procedures which would be an enormous advance if it were achieved.
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and maybe karen, you say something about what happened to that. >> i would be happy to talk about that. i think that one of the challenges now as we move to a perspective reimbursement system and away from a traditional retrospective fee-for-service peace rate system, how do you achieve some of the objective with respect to streamlining the administrative process? and there's a significant amount of progress going on around the country with our health plans working with physicians and hospitals not only to achieve the cost goals, we've talked a lot about nap but also to achieve quality goals and in the process look at bundling so you're not measuring every aspect of a patient's care. if i'm thinking about a bundle for either joint replacement or
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even today now there's been path breaking work going on in bundling cancer care with working hand and hand with physicians on colleges and health plans and so on. that then streamlines the infrastructure in terms of how individual providers or hospitals are paid. as we're thinking about global kinds of initiatives, partial capitation, for example, that's streamlines the under processes that underguard all of that. i think as we move to a more perspective system, we're going see a great -- deal of progress moving away from the peace rate system and what i've seen in the market today, gives me hope and i think it's very encouraging about what is going on and how it's developing. and then as these models taken take hold, then they challenge and we're already seeing this and the medical home arena. we have seen that the medicare
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has participated with our health plans on medical homes, achieving, again, growing -- throwing the boat in the same distribution within a state. and making sure that the providers snow if they're dealing with a commercial as well as medicare there are similar standards and so on and so forth. i think we'll see a great deal of discussion about aligning forces and aligning incentive for change as we look more holistically what can be done and how it can be done. >> thank you. susan, i direct the public public policy substitute at aarp. i'm on the board of directors of the leap frog group. bob, your at the same -- statement around price intrigue me. i'm wondering for it should be being doing more at arp at the think tank because cost and price gets conflated in the
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discussion. on the one hand we're working with the institute of medicine on the idea of patients, they think the higher the price tag, the better the quality. how do we -- what is our role in trying to shift that sphriew consumers? i think sharing in the incentive would help a lot. ting would go a long way. if we go to the website that we learned about today. do you have an agenda around price we should be looking at? >> good question. i'm glad you're on the leapfrog board. i think there's just a threshold question about prices and transparency. let me address that first before the second. it's true that consumer think the more it costs the better it is. they think that in every market they think it in health care. so, i mean, there is the risk that you show price and you drive everything higher. i think that, first of all, i
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don't think you should sell price without quality. and they always should be combined. i think so you to make a threshold decision about whether transparency is good and going to work better for the system in the long run or it isn't. and way back when we started leapfrog group. we had the same issue. the more thans were imperfect. they were challenged and it was a difficult decision because you didn't want to put out imperfect measures. on the other hand, you just had to believe at the end of the day it's the best disinfectant and work on making it were the and do no harm. you there to commit -- so you to commit yourself to transparency. i think the it is true with the cost. not education is discretionary.
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the more we learn about price, the more you see how much difference there is in price that people don't know about and i think things do kind of tend to come downtown mean. that being said, cpr does not have an agenda on price. it's trying to get data out to do something with the price. and it is so difficult simply getting data many providers don't know the prices. clients tend to want to hold on to the competitive reasons they get. medicare is kind of conflicts about sharing d.a. we're early on in this, we're having problems now even getting the data. >> and we can work with you. thank you. >> just a quick postscript to come behind bob. one thing that might be helpful. it matters to a private purchaser an employer, a health plan, what the can charge is as
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a percentage of medicare. for example, if you look in northern california, highly consolidated market versus southern california, you sea that very high proportion hospital payment in terms you can see the cost shifting ratio. you can see 300% of medicare. it matters to individuals and matters to large employers or small employers whether it's 300 percent, whether it's 150%. whether it's 200%. so maybe we ought to have a cost shifting disclosure provision. that would be something that would be material. it would put pressure, actually, on a public discussion about that. which is what happened after in massachusetts after the attorney general wrote her report about what they were seeing in terms of a consolidation and whether the facilities that were charging the highest prices had the highest quality in general they determine they it's not necessarily the case for all
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diagnoses. just a thought about cost shifting measures. it means something about what is happening from the perspective of government compression in reimbursement. what happens on the private sector side and how do you track it? and that might be another way to track it. >> let me make one more point on that. because sue san, what you mentioned leads to a discussion of what do we do about price versus what do we do about utilizationization. i heard about what is the real culprit. and the answer is both are. not only are they both the real culprit. among the real culprit but distortion in price lead to distortion in utilizationization they are both the result of market signals distorted. so when we address these issues, this is kind of a microcause m of the approach that the
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commission is taking to address the issue. you have to address the prices and the incentive that drive them, and the ability of the market and the right signal to the participates in that market. to make sure that resources are allocated appropriately to get what we frpt our system. may i flow in a question that is relevant as a followup to this discussion that i have on in front of me from a card. in respect to cost shifting some economists have suggested that lower medicare prices are the as a result of superior bargaining. they point out in customers in individual and plans pay more than members in large plans. would you argue that large plans cost shift to small plans in and how should medicare decide prices with so much variability in the private sector?
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what do you think, karen. >> the first thing is large -- starting with the large employers and working to the various markets. they are charged based on their specific prices. in the individual and small group market, what particularly the individual market, the reason you generally have higher premium in the individual market, you have health care costs, then as a baseline, if you think about it in a building block. you have individuals who purchase coverage tend to be the older and the sicker and the young and the health. here to for have not purchased coverage. pools can work they are desired to work. so there are other factors that
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are not occurring in the large group bothed in the medicare and the medicaid arena. that has definitely bled over to the private purchaser side and we can track that how much cost shifting occurs. you track it very specifically based on the market position of various facilities. and to the extend they have a market position where it's highly consolidated and they have purchased the smaller and cheaper community facilities than you see the cost being significantly rached the up. let me give you two examples. one where large systems are purchasing community hospitals
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that general had lower pricing, and in some cases higher quality for certain procedures, generally the health plan will get the call saying you're going from 100 to 100% to medicare to something much higher than that just bier have chew of dealing with the large system. it's also occurring as systems are consolidating and purchasing physician practices where we used to do a cardiac on a outpatient basis moving that cardiac c.a.t to the system or bit. it's a 30% tax or 40% surtax. i think that now that purchasers and particular and others until the policy become ware of that. i think it will lead to product i have discussion. how much cost shifting you have in the market is determined by the presence of large systems and their ability to actually
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achieve higher payment. and that's why i think one of the things that could be very, very useful here is to track that cost shifting and begin to think about transparency around cost shifting ratio. it would give consumers and individuals more information than we have today. to look comparatively at what it going on. it's another way to do that in addition to looking at prices themselves. >> and bob is in line. i always like the cost shifting argument. a well known d.c. economist took me aside and said we realize it occurs. we don't have is a model to explain it. i have to deny it in public. i like that one because i don't know what to make about that. karen answered that. i think it's a species argument. what differs between large and small employers if you're
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self-insured the administrative services fee about 10 or 15% of the cost, that can vary by 12 15-or 20%. do the math it doesn't add up. some are premium it's a scale it's how ensurers have to make the cost. i think the idea there being argue that cost shifting doesn't exist. thing are better arguments in that one. >> stow? >> one of the points that frequently gets missed in the cost shifting debate and it is an observation in search of a theory. thing are they are i i ares to explain it. one of the things that is missed terrorist an underlying presumption that cost growth is immutable and somehow handed down from the great beyond. that's what it has to be.
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and i don't buy that presumption. i think, you know, that cost shifting is usually something that would be better described as i want to increase my cost faster than some of my payers seem, you know, feel is reasonable. and if i can find somebody else to bear the burden of those increased cost. i will pass it on. we need to focus more on the underlying cost being shifted. that's why the issue is. >> can i say one other thing i think until fairly recently, much of the discussion and the policy community has really been on premiums. and certainly within the two years ago as we were going through health reform. that was the focus as oppose to the underlying cost. i think now we're getting in under the hood. i think it's important. i think one of the most exciting things about the commonwealth fund report and there are many
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things to commend it. but one in particular that is struck me just the point you made i think stewart very effectively we give the amount we are going to spend in health care over the next ten years, the idea that we can't take $2 trillion out. it might seem like a great deal today. if you look at what we're projected to spend, just in four medicare, medicaid, tax expenditure and subsidize. we are going to spend $17 trillion. and you add the commercial sector. and it's significant. you have done something important just to talk about what the possibility is while maintaining innovation and the system we want. >> sip we're talking about cost growth is inevitable and getting under the hood. there was a "a question of freedom; a memoir of learning, survival, and coming of age in prisoning" the chief actuary.
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to the effect that -- blank an so on all provide hands on services and it's general not that easy for set of professions to improve the productivity. it gets to the general question of whether the productivity the value services can be materially and qualityively improved. the premises of the confronting cost report. it's possible. so comments from the panelists? >> i think that first questioner who asked how the integrated system did got the answer that show it. it isn't as easy in manufacturing. you can't digitize the process or globalize them. but it's certainly can be done at anywhere from 10 to 20% for efficient i think kaiser and other systems have shown.
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i think it's not necessarily making any individual more productive. i think it's removing the redundancy in the system. the same form that we fill out every time we go to another specialists except now it's online instead of on paper. and on and on and on. i think if you kind of allow the workers and the system not spend 20% of their time on redundancy, you have improved productivity. i think that's why systems are important. actually you did a job in trying to start the conversation in the context of meaningful use. that's one way to think about it. quality outcomes and i think that there's been a great deal of excitings discussion both across the agency at hhs as well as in the commercial arena. now the trick is to look at things like meaningful use. look at quality outcome and think about stepping back and saying how do we actually align
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the high value opportunity to improve productivity? just reducing variation and rewarding physicians that are practice -- practicing best practice going the new model that reward quality as well as cost reduction. i think that all of this plailses a -- plays a role. unfortunately, i guess, the take away is not one strategy. it needs to be holistic strategy. i think you did a good job of engs planing there different aspects to this. if you look one the health system has been productive. we give every incentive to increase volume and intensity. that's what we have gotten. we reward folks for increasing revenue by not tieing the revenue to what we want to see the system produce. so when we're talking about
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capacity of the system to improve productivity. we have to yourself which system. we have to have a system that rewards increased productivity in term of what we from our health system. >> we have a couple of people that vitamin patient. you're a second timer. i know, you're going to be brief this time. >> thank you very much. bob. everyone is in favor integrated care but sort of the flip side of that or the part that -- [inaudible] and robert engs manied the too big to fail and the practices in certain market that resulted in price increase. is there a role for state government or federal government to try and limit the consolidation to try and foster
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more competition between systems rather than having a couple of huge players evolve in each market? if so, how do you do that? is there a legislative role for that? we're going figure it out at the cpr meeting in april in d.c. i think it's a combination. i really do. i think you don't want to stop the system from coming together. i think when you see the very good things that can happen in organized systems care you want to promote them. you appreciate those are very few organized system that have been around for decades. it took them to get there. so how do you create the right regulatory system, the right market system? the right amount of information to do in? and the last slide i showed tried to demonstration it's a combination of all. i don't think ain't trust alone is enough. i think there has to be measurement whether it's cost shifting occurring or not.
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i think you have to allow measurement at all level of the system so you can have the performance networks that karen mentioned. i think you need oversight. i think they're starting to do that in massachusetts. part of that nanl steward is chairing will be looking at issues like that. i think it's a multisectoral solution. i don't know legislation offhand that would do it. i think better fund ain't trust is important. i don't think that is a leg of the stool. i think we have to figure this out together. i think the sectors have to work together figure it out. i think the right externality have to be there you remember that chart to kind of drive these systems down to become high performing system in this case can be and discourage them from going down the other path. >> i think that bob gave a great answer. i would add that i think the
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deficit and policy decision has been that we prioritize as a matter of policy getting to this integrated state and forgotten about the other things that need to go along with it. what happens in local markets, i think the ftc has been doing a very good job of looking at that and playing a leadership role. i think that's very important at the federal level. i think at the state level these are the things we have seen attorneys general. martha in montana, the attorney general in california, most recently. i think there other turns general that play a leadership role here. very specifically at the state level. just to keep a census of what is happen bhapg is the competitive situation? what can needs to be done what problems are occurring? i think there hasn't been nearly enough focus on what happens when physician practices are
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acquired, does that add an extra overhead 30 fortunate for a familiar procedure, for example, even 20 that's too much. it adds to the cost of care i think we haven't really in the policy community looked at all of the different variables and thinking about how to do we create the high performing system. i think strategically as each of you in your world your respective world approach the challenge of cost containment thinking about what are the barriers to achieving the result we want. and i think it needs to be up there as a potential discussion. >> yes. owe. to what extend do global payment particularly payments depend on risk-adjustment technology and how far advanced is such technology at the moment?
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>> i was going get to that question, joe. [laughter] >> i should say that twenty years ago we did a briefing which joe said we would a perfect mechanism in the next 18 months. >> i know that. that's why i asked the question. >> i think without a doubt, as you know, there needs to be risk adjustment as part of in the plans and providers doing this now are looking at what population is being served to make sure that the providers are not only going have the right incentive but not be penalized for serving the sickest individuals with the most extreme conditions. the flip side of this also is in the quality space. and the quality measurement in terms of how for us in the commercial arena as we think about stars as we think about the dually eligibles. how do we think about plans serving that very challenging
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patient population. so the risk-adjustment technology is never going to be at that 100% level. however, there have been significant strides made where plans and providers now are looking together to make sure that there in a game sharing kind of relationship across the table. there are appropriate protections without a doubt there need to be appropriate protections to make sure you're not penalizing providers that are doing what they should be doing. which is trying to get the most intense patients from the standpoint of the numbers services that they need in to a care system that works more perspectively rather than retrospectively. >> david, go ahead. >>.
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>> can i say, we're coming down to the last few minutes of the time we have a lotted. we don't want to disrespect your time. so i would ask you as you are listening to the question and answer. to fill out the blue evaluations forms before you go. thank you. >> so this is a two-prong question. very different two questions. can a case be made to increase health care spending isn't so bad because of the jobs it supports. what a example of overhead cost in medicare that should be reduced? >> kate wrote a compelling piece, i think it was new england journal, not to -- within the last several months raising the issue on the first point with respect to the job growth, if you look at the new job growth, a significant amount of new job growth is in the health care space and we are
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talking today about reducing health care costs. and i think it gets book how do we think about where are the -- what needs to be done with respect to creating and redesigning a work force necessary to support care management disease management, moving people who don't need to be in institutions whether it be nursing home or -- surely there's more work that need to be done opportunity for developing career path, et in that regard. and we need to have those conversations. but to the extend we from bringing more people in to support the existing traditional fee-for-service system that encouraging people to do more. that's the way they get paid. that's not a good thing. we need to have discussion about what is in bucket one versus bucket number two. and without taking too much time, i think those are the
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kinds of discussions that need to be held another the state level. you want to look at building and construction. you want to look at what is going on. there's been explosion of building and construction. how do we maintain possibly deal with the overheads demands it creates in the future as we think about reducing health care cost. how do we think about opportunities to develop and encourage the right set of workers working hand and hand with physicians and to carry out the challenges of these new care systems? how do we think about variations which stewart talked about very effectively. all of these things, i think, are better talked about at local level, the state level, in particular, if not the local level below that. particularly for large state as
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opposed to necessarily dealing with them in washington where we're far away from how all of these issues play out. that's why i think it's going to be important to think about what are the levers that could be worked at the state level versus the national level, and then how do we align what is going on in the private sector to achieve the results that all of us want? i think that's the way to begin thinking about the question of work force. so we get the -- it's the everybody wants the right care, right time and right setting. how do we get the right work force there and how do you have more efficient sei as david posed question at the same time you don't have this system that is not the sustainable. i guess every five years we have been participating in programs where we talk about the sustainability of the system. it manages to sustain itself. with the focus on the economic
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challenges nationally, health care is such ab important part of that. ic we have hit the point where we have to take the fork in the road. it's not an easy series of choices at all. we ought to think about twr is the best place to have the discussions and where can and should we make the kinds of choices? >> also, when you think about job grout throughout the economy. just picture health care center that only grows 75% over the next ten years. that takes frees up $2 trillion of economic resources. $500 billion of those in the pocket of house holgtd -- hold people and their families. they can use to spend on other priority for their own lives. that has a foacial create a tremendous number of jobs elsewhere in the economy. taking the pressure of the
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employers, by slowing the growth of health spending. frees them up to innovation and create other jobs that aren't necessarily in the health care sector. without losing much in the amount of revenue and the potential employment in the health care sector. i think we need to look beyond the health care sector and think about how we can better use the resource to support not only public endeavor like education and public safety and roads, but also money that can be pumped to the private sector where house hold have more disposable income to use for other things they want to -- purchase. >> we are almost at the ends of our time. we can squeeze -- [inaudible] okay. i think we have not at all exhausted this topic.
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we may have exhausted or panelist and some of you. we will return to it. this has been at least for poor country lawyer an enlightening discussion about so. economic issues. we haven't done too much of the politics, but i suppose there might be a bit of that in some of the decisions that get made over the next months. let me take this occasion to thank you for a plethora of wonderful questions and hanging in there in a difficult topic. thank our friends at the commonwealth fund for not only providing us with cosponsorship, but great distribution -- direction in the shaping of the program. i ask you for thanking or panel for a terrific discussion on a difficult topic.
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[applause] you can probably watch the rerun on c-span at 2:00 a.m. tomorrow morning. [laughter] [inaudible conversations] association of american medical colleges estimate that the u.s. will have a shortage of approximately 21,000 prepare care physicians by 2015. tomorrow a panel of primary care doctors will testify on access to primary care and the senate health subcommittee. watch live coverage on c-span at 10:00 a.m. eastern. later in the day, president obama will be in las vegas to talk about immigration policy. monday a bipartisan group of senates released their proposal to overhaul the u.s. immigration law. watch the president's remarks love on c-span just before 3:00 eastern. the head of the international monetary fund said over the weekend that the growing economy is heading in
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the right direction but the recovery is fragile. that's next on c-span2. later a discussion on political and social changes in the arab world. ♪ >> if we turn away from the needs of others, we aligning others with the force which is are bringing about this suffering. >> white houses is -- and you ought to take advantage of it. >> obesity in the country is nothing short of a public health crisis. >> i think -- little antenna that went up and told me when somebody had the agenda. >> so much influence in the office. it would be a shame to waste it. >> i think they serve as a window on the past to what was going on with american women.
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>> she becames the -- she's the only one in the world he can trust. >> many of the women who were first ladies, they were writers. a lot of them were writers. journalist, they wrote books. >> they are in many cases, quite frankly, more interesting as human beings than their husband if only because they are not first and foremost defined limited by political ambition. >> dolly was e both socially adapt and politically salve savvy. >> dolly madison loved ever minute of it. mrs. monroe hated it. you can't rule without including what women want and what women have to contribute. during the statement. you were breathless and it was too much looking down. i think it was a little too fast. not enough change of pace. >> yes, yes? >> probably the most tragic of all of our first ladies.
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they never should married. they later wrote in the memoir that i never made any decisions. i only decided what was important and when to friend to my husband. you stop and think about how much power that is. it's a lot of power. >> part of the battle against cancer is to fight the fear that accompanies the disease. >> she transform the way we look at the bug boo and made it possible for -- countless people to survive and to flourish as a result. i don't know how many presidents have that much impact on the way we live our livings. >> walking around the white house grounds, i'm reminded about all of the people who have
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lived there before and particularly all of the women. >> the first ladies they're private and public lives. c-span teaming up with the white house's historical association for first of the kind original series for television. firstfirst ladies influence and image. airing over two season. season one begins president day at 9:00 pment eastern and pacific on c-span, c-span radio, and c-span.org. what i didn't mention in the opening i thought i could leave it no now. the large part the dominant part
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the overwhelming part why we're in the relief mode is the scale of the promises and interventions made by central banks and point out the role of the play in the last year. extraordinary commitment and it seems some people think to the won the war without having to fire a shot rather than the nerve wracking sort of position. what we're seeing in japan suggest the monetary and u.s. to some degree too the monetary policy becoming more expansion their in the last year right now. so are we getting anywhere near the end of the extraordinary monetary policies we're seeing in the major central bank? what next? >> that's the question? is i'm going ignore that question and plow on what w what i was going say. i'll get to that. >> this was the question you were supposed to answer. very clever central bank. >> watch. just watch. i got here on thursday midday.
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and that the point, the discussion was at the trail risk had been reduced. sometime by last evening that became the had been eliminated. that explains the back half of this auditorium being empty. those are the people -- thank you for showing up. you are the obviously the people who think there are risks out there. and there are and christine has outlined some of the measures that are necessary to fully eliminate these. it's not about central bank action. it's important but the omt and the rtlo and the other measure by the ecb criewrnl but not decisive. i think that's one of the core points i want to make. that these were reinforced by measures of the marshall level both on the fiscal side of yiewrl and structure side. beneath are close to being
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finished. and christine outlined we're in the early day of banking union. the other aspect of refounding european monetary it's going it take years. and it's the imiftion those three which have reduced the tail risk in europe and set it for proper growth and you have the similar situation in the united states where the extraordinary action of the fed have been crucial but not absolutely decisive. and need to be the medium term measures not for fiscal consolidation but other aspected of the u.s. economy. my second point which is related to that which is thattic people should be very cautious about describing to something that has been adescribed to -- ascribed to. i didn't hear him say this. apparently larry summers used the framework of a global stability put for central banks being give by central bank which
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he's not saying it's true. but that that takes the tail risk off. again, that is not correct in my opinion. there is not an ability of central bank to take the risk out or set the seats for a sustainable recovery. third point, challenges for 2013. i make it the next couple of years from a monetary and fiscal -- financial sector policy perspective and there are other issues to be done. monetary for both it's to finish the job that has been started. for monetary policy it's to ensure that the major economy they achieve the escape i have localsty. that is part of what and i do not speak for the federal reserve. i don't speak for the u.s. treasury here which isn't represented here. but the extent to which the fed has used threshold base guidance part of the point of that in my opinion, is to ensure that as the economy gains traction, the
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stimulus is continued to be provided entirely appropriately to ensure that the u.s. economy achieves the escaped i have localsty which matters greatly. on financial reform. quickly. the next two years will be decisive in finishing the job on the capital liquidity too big to fail. equally importantly is the sort of forgotten bit of perform which is readdressing shadow banking over-the-counter derivative. these are the areas that amplify the last crisis and do so again unless we complete our agenda there. thanks. >> thank you very much. and obviously i take and the audience is expected must take your very firm barning that -- warning that the central wang are not able to remove terrorist from the system on their own and having not done so to the --
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occurred as a result of policy change it is brings us very, very nicely to the discussion of the policy revolution that seems to be occurring in japan in recent weeks. i was taught this morning a new word in english which is abnormallic. and to describe the revolution in monetary fiscal and other policies designed to end. i suppose what many think is the -- in japan. ..
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>> the administration has the highest priority in the deflation started and was accompanied by the appreciation of the u.n. it has been appreciated by the national market so that they can be allowed to recover. this is implementing the three planned strategy, and consisting of old monetary policy, being flexible, and encouraging investment. we will aim for reversing the long-lasting treating economy and revitalizing the same economic growth with more jobs and higher income. we adopted the emergency measures in the japanese
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economy. we do implement public works for accelerating this preconception and certainly for strengthening the nation's infrastructure and mitigation. we also have measures that should continue to sustain growth with investments and innovation and strengthen human capital development. we will and we do expect the real-time gdp by around 2%. the government and the bank of japan and the joint achievement on having sustained economic growth. we have a target of 2% on the year on year rate of change in the cdp.
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japan is implementing the greatest monetary easing that canada's possible time. over the near and long-term, we are competitive with the economy to overcome energy constraints and accelerate the removal of domestic obstacles come including regulation. we are trying to raise growth. there is an absence of a clear commitment from the government. taking into account these lessons, we have to strongly consider ourselves to our growth and strategies which will utilize all the other policies as well, including all the major focal point. we plan to adopt a new growth
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strategy in the united states. this policy will be noted even before the finalization. to extend economic policies, we will facilitate the expansion of japanese business activities and promote encouraging long-term investment. in addition, he will be holding this sound in japan. we will manage the short-term fiscal policy in a timely and flexible manner. while we note the importance over the near and long term. we also think it is necessary
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stick to this between fiscal 2010 and fiscal 2015 and achieve fiscal service in fiscal 2020. [speaking in native tongue] >> translator: and the japanese economy, we will incur the fiscal challenges. but the rest of the world has not yet experienced, such as the new legislation and investments in the aging population. japan intends to contribute on a worldwide level by working to solve these issues ahead of the other nations and to show the prescription and find a cure.
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economics is my explanation in a nutshell. thank you. >> thank you very much. that raises many questions in which we will certainly come back to. i would like to move on. i would be interested in from your perspective you are running an organization which looks very closely at what is going on in the developed world. how do you see the policy challenges, and do you feel that in the u.s. and the eurozone in particular from the two biggest parts apart from japan, which i want you to talk about in a moment, do you feel that they are really on the right path? that they are obviously having concerns about locations of the exchange rate and fiscal stability and to what they are doing. how concerned are you about these aspects of the programs that we just heard discussed?
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>> first of all, we are relieved about the fact that we have exhausted our monetary policy? because we have used it to the hilt? that means we are relieved because we have used all the fiscal policy room that we had we are relieved because all of the measures we have taken, the measures are finally in place and now we want we are relieved because of these measures in a number of countries have been taking a number of structural measures that they could and probably have avoided simply because it was in exchange for financial support. it's not a very pretty picture, i have to say. we should be very worried, because the lack of room for some of the more traditional views is gone and we are left
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with a few of these tools. what are we thinking as we go out of these traditional tools? what we do we do now? well, we are saying go green and go structural. why? because indication education and regulation and innovation, you know, territorial development and product market flexibility and tax structures, the health system is an and the aging challenges in the women and girls etc., these are the issues that we have to focus on if they are going to keep growth going for the medium and long term. there are still too many victims of the crisis. 50 million people who are unemployed today. roughly half of the united states and the rest mostly in
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europe. in europe, unemployment is still rising, approaching 12% in the euro area. steadily hovered around 8%. no relief from that and no reasonable source of relief. we double or triple those numbers and again, nothing to write home about, long-term unemployment, people disconnecting from the labor market and problems with migration issues and problems with the delivery of public services precisely because of that. we are saying go green because we are on a collision course with nature. because at the rate where we are going, we are going to have a poor degree of success by the end of the century. we are talking about improbable scenarios, but we are on a course and have not done very much about it.
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the biodiversity, the air, the waste, these things continue to be challenges. because of the crisis, we have been distracted and there are some institutional issues take away a little bit of obsolete. democracy and governance issues, the g8 and g20 have not been mentioned here. we have to improve international cooperation to get home. yesterday we wrote a panel about what to do in 2013. no one mentioned trade. how could we not mention that going forward. in the case of japan, we did mention the fact that it was very welcome that they would go for growth.
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but the monetary policy was a side of caution that should be dealt with prudently. the nuclear program, putting emphasis on employment, the question of aging and etc. and being ready to support and invest. thank you. >> and take your remarks, which are wide ranging, as a sort of statement that says that we are not really fearing being hanged tomorrow. we suddenly realize all of these incredibly large number of things that we have been planning to do for years. they are all neatly on our agenda, which is very good for international policy making. i'm going to turn now to mr. yi
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gang. the challenges in china are restructuring the economy. what challenges will china be meeting in the next year? >> thank you, martin. after seven quarters of growth rate gdp slowing down, last quarter, finally it was heading up. last quarter, the growth rate was 7.9 and the growth rate last year was 7.8% area we are looking forward for this year i think china's growth rate will be about 8%. in terms of inflationary
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pressure, lester it was diminishing last year. this year i think some of the increasing pressure will come back. i predicted it will be about 3%. a little bit over the trade. the second point i want to make is how china will achieve growth. i think the growth of china nowadays is fueled by domestic demand. the rule in income has gone up quite a bit. the growth rate often come has been much higher than the growth rate of gdp. so that more the more people have income and they have more consumption.
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so if you look at the domestic market of china, in recent years, that consumption is very robust the second reason is that the urbanization process is still going on we just passed the 50% urbanization point. so that if we look at the history of our countries of urbanization progress, they still have a long way to go. a lot of the investment will make the economy continue to grow. the third part is we continue to have the macroeconomic policy that is encouraging domestic consumption and encouraging imports. so that we want the surplus to
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continue. last year, a percentage of gdp was about 2.8%. i think this year we will continue that trend. it will be a little bit higher. we will continue to sink as a percentage of gdp. the policy will continue under a goal is to basically achieve this. the other point is that we emphasize environmental protection and energy efficiency so that the growth has the higher point. the last point i would like to
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make is the international environment, especially the quantitative easing monetary policy for developed countries we must continue. we must continue knowing the trade is very important. overall, i think that it is pretty much the prediction of the imf. thank you. >> thank you so much. it is very difficult to get used to the economy of the scale, which has had growth of 7.8%. we are thinking about the implications of that. then our final speaker has a very interesting perspective.
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remarkably rapid growth, a little under noticing how it's going. what are the policy challenges that you feel must be mad if further progress is to be delivered? >> thank you very much, martin. let's talk about economics this week. the imf anticipates 5.7% growth. that's pretty good considering the circumstances.
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in regards to the issues that they are discussing comedy institutions a second letter that is showing that funding is fundamentally important. with relations going in that direction, it's not often that this leaves me disconcerted. there is a juncture between monetary policy that is a lot more accommodating i think that
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part of what needs to happen now is some signaling of authorities who are assisting in spending so that we are not going to have a lack lot of growth. and in the coming year, the absence of growth. what else can they do? unless there is a different mindset, i think we are going to remain as hopeful as we can for
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the future and we need to check the growth opportunities. >> i am so grateful to you for having said that. if you were me, and i will now get to the questions on fiscal monetary mix. because it is a pretty big issue and none of you discussed it, so i will discuss it. but the thrust of policy clearly in the major developed world is towards this fiscal tightening and if anything, further monetary loosening. this raises a huge debate in economics, which is also a huge debate with economic institutions, notably led by a very distinguished chief economist of the imf. so, christine lagarde, are you comfortable with the policy that you are seeing in the major countries, that leads us to the changes in japan, which seems to be more of that mix and have we
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got this right in the united states and the eurozone and are they getting it right in japan? it does seem to be a pretty central question. >> thank you, sir. let's just focus on the fiscal policy. it he referred to that end we do believe that there has to be some degree of fiscal accommodation. that perspective hasn't changed. there has to be consolidation because the general structure is invariably overburden of that on one hand and a crippling policy
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that has been with them for a long time. fiscal consolidation has to occur at the right pace. some countries that have the financing flexibility can go at the more reduced pace and sometimes they have been asked to do. the united states of america where there has been fiscal consolidation over the last three or four years. we think that they should continue to have a degree of fiscal consolidation at pretty much the same piece, which is roughly one percentage point per year. in the eurozone, as we have said repeatedly that many countries,
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we could say that it was unnecessary to go at that rate and pace. and clearly the suggestion that we made concerning the timetable of greece, where we did have that extra two years into given to the country as an indication of that. i will not point the finger at any of them, but we believe that from a general perspective within the eurozone, this should not be an accelerated pace. as with, believe that instead of having nominal targets, we believe that it is a much better approach to have structural targets. which means clearly the structural targets have the right measurement. finally to accommodate the
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physical accommodation policies, we believe that monetary policy is an absolute must in order to encourage growth, which must go in parallel the degree of fiscal consolidation that i have referred to. >> how to use the policy options over the next year? issues created by managing the fiscal policy, it is on the path at different rates and what problems does this create and how do you internalize this within the monetary policy purpose looking at the major economies and the decisions they have to take? do not think you answered your own question. you internalize the fiscal stance. monitoring policies more nimble.
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there is a peace consolidation focused on structural cyclically adjusted between the automatic vaporizers work. monetary policy provides appropriate stimulus would she price stability mandate. that is the only way, in my view, for the coordination to happen and that is the most effective way for the coordination to happen. and i think it is not as complicated as the question is sometimes put forth. >> okay, on the monetary policy side, you delivered a speech called guidance not so long ago, which has been widely noted. in which you discuss the review beyond the threshold guidance,
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which is what the fed has been doing and you talked about nominal gdp targeting. do you think those sorts of ideas are very academically interesting and fascinating? policy relevant ideas and relevant developed countries? >> all countries are relevant. and i think a couple of things. something that was said earlier was that monetary policy has been taken to the hills and they continue to have monetary policy options and all the major economies in those have to be framed in the context of the mandate. the mandate is a decision of the government or through the
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constitution. it is operational independence to achieve a mandate that has been given to those institutions. so to get to your specific question, within the framework of flexible inflation targeting that exists in most of the developed economies, there remains considerable flexibility, which includes the use of communication, which includes the use of other unconventional instruments and in the context of a given fiscal sense, it can be used to achieve price stability and that is the contribution to achieving sustainable growth. >> so when you have the supplies, are you worried about what will happen in the developed world? >> there are certain panelists that i will watch and much.
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of course, operational independence is important. the problem is that i am thinking in the long term. i think that is an enormous issue. it is the ability to take a longer view on how we move from where we are. this is why i think that what we have is fundamentally important. in taking the view of this contest talking also about the social notions. because if we only use economic or macro measures, then we really appreciate what is happening with the people.